* Gaza death toll reaches 160, includes many civilians
* Israel commandos, in night-time raid, clash with militants
* Western leaders say ceasefire urgent, Germany plans mission (Updates figures, adds Israeli poll, Kerry-Netanyahu conversation)
By Nidal al-Mughrabi and Jeffrey Heller
GAZA/JERUSALEM, July 13 (Reuters) - Thousands fled their homes in a Gaza Strip town on Sunday after Israel warned them to leave before it attacked rocket-launching sites, on the sixth day of an offensive that Palestinian officials said has killed at least 160 people.
Militants in Hamas-ruled Gaza kept up rocket salvoes deep into the Jewish state as the worst bout of Israel-Palestinian bloodshed in two years showed no signs of abating, and Western foreign ministers said a ceasefire was an urgent priority.
Israel dropped leaflets into the town of Beit Lahiya near Gaza's northern border. They read: "Those who fail to comply with the instructions to leave immediately will endanger their lives and the lives of their families. Beware."
The Israeli military told the residents of three of Beit Lahiya's 10 neighbourhoods to get out of the town of 70,000 by midday on Sunday. U.N. officials said some 10,000 people had fled south to eight schools run by the world body in Gaza City.
A senior military officer, in a telephone briefing with foreign reporters, said Israel would "strike with might" in the Beit Lahiya area from the late evening hours on Sunday.
He did not say if this would include an expansion of an air and naval offensive into a ground operation in the north of the narrow, densely populated Mediterranean enclave.
"The enemy has built rocket infrastructure in-between the houses (in Beit Lahiya)," the Israeli officer said. "He wants to trap me into an attack and into hurting civilians."
The Gaza Health Ministry said at least 160 Palestinians - among them about 135 civilians, including 30 children - have died during six days of warfare, and more than 1,000 hurt.
At schools run by the United Nations Relief and Works Agency in Gaza City, Beit Lahiya residents arrived in donkey carts filled with children, luggage and mattresses, while others came by car or taxi. One man, still in pajamas, said some inhabitants had received phone calls telling them to leave.
"What could we do? We had to run in order to save the lives of our children," said Salem Abu Halima, 25, a father of two.
Gaza's Interior Ministry, in a statement on Hamas radio, dismissed Israel's warnings as "psychological warfare". It told those who left their homes to return and others to stay put.
Dozens of houses in Beit Lahiya were levelled by Israeli bulldozers during the month-long Gaza war of 2008-2009. Israel says such structures serve as gun nests and rocket launch pads.
The leaflets marked the first time Israel had warned Palestinians to vacate dwellings in such a wide area. Previous warnings, by phone or so-called "knock-on-the-door" missiles without explosive warheads, had been directed at individual homes slated for attack.
A Palestinian woman and a girl aged three were killed in Israeli air strikes early on Sunday, the Health Ministry said.
Hostilities along the Israel-Gaza frontier first intensified last month after Israeli forces arrested hundreds of Hamas activists in the Israeli-occupied West Bank following the abduction there of three Jewish seminary students who were later found killed. A Palestinian youth was then killed in Jerusalem in a suspected revenge attack by Israelis.
Despite intensified Israeli military action - which included a commando raid overnight - Palestinians continued to launch rockets across the border.
A long-range burst on Sunday triggered air raid sirens and sent people running for shelter at Tel Aviv's Ben-Gurion Airport, which has not been struck in the hostilities and where flights have been operating normally, and some city suburbs.
No one has been killed by the more than 800 rockets Israel says have been fired since the offensive began. Lacking guidance systems, many of the rockets have fallen wide. Others have been shot down by Israel's Iron Dome interceptors.
"We will continue to act with patience, forbearance, with determination, responsibility and aggression to achieve the goal of the campaign - restoring calm for a long period by dealing a significant blow to Hamas and other terrorist groups in the Gaza Strip," Prime Minister Benjamin Netanyahu said in broadcast after his cabinet met.
International pressure on both sides for a return to calm has increased, with the U.N. Security Council calling for a cessation of hostilities and Western foreign ministers meeting on Sunday to weigh strategy.
French Foreign Minister Laurent Fabius spoke of "a dangerous escalation" and told reporters before talks in Vienna with his U.S., German and British counterparts that securing a ceasefire was "an absolute priority".
German Foreign Minister Frank-Walter Steinmeier will travel to the Middle East on Monday and Tuesday for meetings with Netanyahu and U.S.-backed Palestinian President Mahmoud Abbas, who agreed a power-share deal with his Hamas rivals in April.
Germany mediated a prisoner swap in 2011 in which an Israeli soldier held by Hamas was freed in exchange for more than 1,000 Palestinians jailed by Israel.
U.S. WANTS 2012 TRUCE RESTORED
U.S. Secretary of State John Kerry, whose bid to broker Israeli-Palestinian peace fell apart when Netanyahu called off negotiations over the Abbas-Hamas pact, reasserted Washington's support for Israel's right to self-defence on Sunday.
But a senior State Department official said that Kerry, speaking to Netanyahu by phone, also "highlighted the U.S. concern about escalating tensions ... (and) readiness to facilitate a cessation of hostilities, including a return to the November 2012 ceasefire agreement".
That referred to an Egyptian-mediated truce that ended the last major Gaza flare-up. Cairo is now again seeking calm and Israeli media said Turkey and Qatar have also offered to intercede with Hamas, which is formally shunned by Israel, the United States and European Union as a terrorist group.
Israel has been publicly cool to truce proposals, saying its current assault on Hamas is the best guarantee of long-term quiet. Israel says an invasion of Gaza remains an option and has mobilised more than 30,000 reservists, but most attacks have so far been from the air, hitting some 1,200 targets.
A survey by Israel's Channel 10 TV found that 90 percent of the country's Jewish majority supported the air offensive. Asked if Israel should send in ground forces, 47 percent of said yes, 32 percent said no, and 21 percent were undecided.
Giving details of Sunday's naval commando raid, Lieutenant Colonel Peter Lerner, an Israeli military spokesman, said four members of the force were wounded in skirmishes with Gaza gunmen but the rocket launching site they attacked was hit.
Hamas said its fighters had fired at the Israeli force offshore, preventing them from landing. Lerner said the forces had "completed their mission".
Hundreds of mourners attended the funerals on Sunday of the 17 Palestinians killed in Israel's bombing, on Saturday night, of the home of Gaza police chief Taysee Al-Batsh.
"With our souls and blood we will redeem the martyrs!" the crowd chanted as armed men fired in the air.
A Hamas source said Batsh was in critical condition and that all the dead were members of his family. The Gaza Health Ministry said 45 people were also wounded in the bombing.
The Israeli military said it had appointed a general to investigate the high civilian toll in several Gaza strikes.
An Israeli teenager was wounded on Sunday by a rocket that struck the southern town of Ashkelon, emergency services said. (Additional reporting by Maayan Lubell, Ari Rabinovitch and Allyn Fisher-Ilan in Jerusalem, John Irish, Fredrik Dahl and Louis Charbonneau in Vienna; Editing by Rosalind Russell)